CSR Building Products Limited v United States Gypsum Company - [2016] APO 7

IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
CSR Building Products Limited v United States Gypsum Company [2016] APO 7

Patent Application: 2012222102

Title:Lightweight, reduced density fire rated gypsum panels

Patent Applicant:  United States Gypsum Company
Opponent:  CSR Building Products Limited
Delegate:  Dr S.D. Barker
Decision Date:  12 February 2016
Hearing Date:  Written submissions filed on 20 November 2015
Catchwords:  PATENTS – opposition to the grant of a patent – award of costs – opposition succeeds – costs awarded against the applicant – award reduced by 25% in recognition of the grounds that were unsuccessful

Representation: Patent attorney for the applicant: James & Wells
Patent attorney for the opponent: Griffith Hack

IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Patent Application: 2012222102

Title:Lightweight, reduced density fire rated gypsum panels

Patent Applicant: United States Gypsum Company
Date of Decision: 12 February 2016
DECISION
I award costs according to Schedule 8 against United States Gypsum Company, these costs reduced by 25%.
REASONS FOR DECISION

Patent application number 2012222102 was filed as an application under the Patent Cooperation Treaty on 24 February 2012. The applicant is United States Gypsum Company (the applicant). The application was examined and accepted by the Commissioner, and subsequently opposed by CSR Building Products Limited (the opponent).
On 6 November 2015 I issued a decision in relation to the opposition (the earlier decision),[1] finding that the opposition succeeded on the grounds of section 40(2)(a) and section 40(3). I allowed both parties two weeks to file submissions in relation to costs. Those submissions were filed on 20 November 2015.
[1] CSR Building Products Limited v United States Gypsum Company [2015] APO 72
Submissions of the parties
The opponent's submissions were succinct:
"CSR has been successful in its opposition. As is standard Patent Office practice, costs follow the event. We see no reason why there should be any deviation from this approach."
The applicant's submissions were:
"The Applicant submits that this is a case in which it is appropriate that each party should bear its own costs, for the reasons set out below.
The Opposition was successful on two grounds: disclosure and support.
The Opposition failed on the grounds of clarity, novelty, inventive step, utility and manner of manufacture.
The grounds of disclosure and support may still fail as the Delegate at [218] has stated that he considers that those matters can be overcome by amendment and has allowed the Applicant an opportunity to propose amendments.
The Delegate's decision on support (at [109] – [118]) did not turn on any evidence prepared by the parties, but rather was limited to an analysis of the specification.
The Delegate's decision on disclosure (at [83] – [108]) made reference to only one paragraph of Dr Bruce's evidence, one paragraph of Mr Aird's evidence and two paragraphs of the evidence of each of Mr Engbrecht, Mr Behrinig.
The great majority of the evidence and submissions of both parties was devoted to the grounds which the Opponent pressed but lost, particularly novelty and inventive step. It would be perverse and unjust if the Applicant were to pay the Opponent's costs in relation to that work.
This is the first case to decide the new grounds of support and disclosure as introduced by the 'Raising the Bar' amendments to the Patents Act 1990. This required both parties to undertake legal research above and beyond what might normally be expected in an opposition, including research on law in other jurisdictions. There is a public interest in the Delegate receiving the benefit of such research. Such legal research for the public interest should not be the subject of adverse costs orders."
The law
The power of the Commissioner to award costs is based on section 210 of the Patents Act and regulation 22.8 of the Patents Regulations. The power is discretionary, so I must take into account all relevant considerations. The general approach to the award of costs by courts is set out in Ruddock v Vadarlis:[2]
"Within the general discretion of the courts to award costs it is accepted by decisions in both Australian and English jurisdictions that:
* Ordinarily costs follow the event and a successful litigant receives costs in the absence of special circumstances justifying some other order.
* Where a litigant has succeeded only upon a portion of the claim, the circumstances may make it reasonable that the litigant bear the expense of litigating that portion upon which he or she has failed.
* A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other parties' costs of them. In this sense 'issue' does not mean a precise issue in the technical pleading sense but any disputed question of fact or law."
[2] [2001] FCA 1865; 188 ALR 143 at [11]
However, the adoption of an 'issues' approach is only appropriate where it is fair to do so,[3] and the reduction in the award of costs is not an exercise in financial precision. Rather, what is required is a search for a "fair estimate"[4] of the quantum of any adjustment, based on the particular facts as a whole, recognising that "the assessment will often be rough and ready".[5]
[3] H Lundbeck A/S v Alphapharm Pty Ltd (No 2) [2009] FCAFC 118 at [9]
[4] H Lundbeck A/S v Alphapharm Pty Ltd (No 2) [2009] FCAFC 118 at [12] and [14]
[5] Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107 at [5]
Another consideration is whether the successful party has engaged in any misconduct that would disentitle them to an award of costs.[6]
[6] see Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72
The normal outcome of these principles is that success by an opponent on all grounds of opposition is not necessary for an award of costs. Rather, success on a substantial ground of opposition will normally lead to an award of costs,[7] but success on an insubstantial ground may lead to a reduced award of costs.[8]
[7] as in Inco Europe Limited v Yazaki Sogyo Kabushiki Kaisha [1985] APOR 1
[8] as in IBM v Columbia Ribbon (1970) 40 AOJP 1056 and PPG Industries Inc v Stauffer Chemical Co [1985] APO 24; (1985) 5 IPR 496
Was the opponent successful?
The opposition succeeded on two grounds and was unsuccessful on other grounds. Prima facie the opponent was successful.
Did the opposition succeed on substantial grounds?
The opposition succeeded on the grounds of section 40(2)(a) and section 40(3). These grounds are referred to as disclosure and support. I consider that these grounds are substantial in the present case, especially noting the amendments brought about by the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 were intended to create a "more stringent requirement"[9] in relation to these matters. Further, the opposition succeeded on these grounds to a significant extent, as stated in the earlier decision:
"The technical contribution to the art is that high expansion particulates can produce a low density, fire resistant panel when prepared according to the samples numbered 1, 4, 5, 12, 13, 14, 18, 19 and 20."
[9] Explanatory Memorandum, Intellectual Property Laws Amendment (Raising the Bar) Bill 2011, page 47
I am satisfied that the opponent succeeded on substantial grounds.
The unsuccessful grounds
I am satisfied that it is appropriate to adopt an issues approach in this case, and adjust the award of costs accordingly. In this case the opponent was not successful on the grounds of entitlement, manner of manufacture, novelty, inventive step and utility. While these are in themselves substantial grounds of opposition, that is not enough to automatically reduce the award of costs. The applicant submitted that the evidence in the case was largely directed to the unsuccessful grounds, and not the grounds on which the opposition succeeded. However, the evidence also relates to the successful grounds. It is not appropriate to simply count the percentage of grounds on which the opposition did not succeed. The costs should be reduced to reflect that although the opposition succeeded to a significant extent there was a lack of success on several substantial grounds. I consider that a reduction of 25% is an appropriate balance in this case.
Misconduct
In this case it is not suggested that there has been any misconduct by the opponent in the prosecution of the opposition.
Public interest considerations
As noted by the High Court in Oshlack v Richmond River Council,[10] it is difficult to define with certainty what constitutes a 'public interest' matter, and even if it can be identified, there is no justification for treating such matters differently:
"I can see no justification in legal principle or social justice for depriving a successful private litigant of his or her costs simply because that person was unlucky enough to get caught up in 'public interest litigation'."[11]
[10] [1998] HCA 11; 193 CLR 72
[11] [1998] HCA 11; 193 CLR 72 at [96]
I am doubtful that the present opposition can be seen as a public interest case, and even if it were that would not be a sufficient basis to reduce the award of costs.
Conclusion
I conclude that the opponent is entitled to an award of costs, and that the award of costs should be reduced by 25%.
Dr S.D. Barker
Delegate of the Commissioner of Patents